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Low phone call rates lure Kenyans to post-paid tariff

23 January 2015, 08:25

Nairobi - The number of mobile phone users on post-paid tariff in Kenya has grown considerably as people embrace the subscription service due to low call rates.

Post-paid subscribers are hurtling towards the one million mark, according to latest data from the Communication Authority of Kenya (CAK), with many having joined in in the last few months.

While the bulk of Keny's 32 million mobile phone subscribers are on pre-paid tariffs, post-paid subscription are now growing faster than the former in every quarter.

"Post-paid subscriptions grew 7.1 percent to reach 712,894 in the quarter ending September 2014, up from 665,697 subscriptions posted during the last quarter," said CAK in the industry report released Tuesday.

"Generally, the number of pre-paid subscriptions grew by 1.5 percent to stand at 32 million, up from 31.5 million during the previous quarter. The ratio of post-paid to pre-paid subscriptions stood at 1:45,"said the report.

Most of the post-paid subscribers are on Safaricom network. As of September last year, Safaricom, the country's leading telecom, had 575,727 subscribers, up from 522,783 in the previous quarter, according to CAK.

Following closely is Airtel, which had 132,557 subscribers during the period in review, a drop from 137,991 the previous quarter. On the third spot is Orange Kenya, with 3,135 subscriptions, down from 3,452 in the quarter ending June 2014.

"Safaricom lost 0.6 percent of its prepaid subscribers but gained 10.1 percent of post-paid subscribers. Airtel, on the other hand, gained 6.9 per cent on pre-paid subscribers but lost 3.9 percent of its post-paid subscribers," noted CAK.

Also read: Airtel Kenya drops roaming rates in Uganda

Similarly, Telkom Kenya (Orange) gained 12.6 percent pre-paid subscribers but lost 9.2 percent of its post-paid subscribers.

Safaricom has been the game-changer in East African nation's post-paid tariff service.

Subscribers of the service that was initially offered to companies only are calling from as low as 0.01 U.S. dollars per minute, compared to 0.04 dollars for the same period for pre-paid users.

To enjoy the low call rates, individual customers either pay 11 dollars or 28 dollars every month for a blend of talk time, text messages and data bundle to use within the network. Corporates, which form the bulk of post-paid subscriptions, pay at least 0.02 dollars per minute.

The faster growth of individual subscribers under the tariff made Safaricom in May 2014 consider terminating the service, citing losses.

"Individual customers under the post-paid tariff are virtually making calls for free. The tariff is not profitable," noted Safaricom CEO Bob Collymore then as he announced the decision to stop the tarrif.

However, the company has since rescinded the decision and said it will increase call rates under the tariff in May and retain the subscribers.

"I went for post-paid tariff sometime in June 2013 to cut my expenses. I was spending a lot of money on calls but the post-paid tariff offered me relief. I now pay the 28 dollars per month and get 2,000 minutes for on-net calls," said Calvin Kimutai, a banker, adding that he influenced over five of his friends to join the tariff.

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- Xinhua


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